EV sales continue to rise steadily in California, reaching a record 22.3% market share in Q3. But Tesla has returned to its position as second-best selling brand in the state, behind longtime leader Toyota, after briefly eclipsing the brand last quarter.

The California New Car Dealers’ Association releases its “California Auto Outlook” each quarter, breaking down trends in the auto industry for the previous quarter. It’s out with its new Q3 report today and we’re going to break it down for some insights.

As has been the trend for the last several years, EV sales continued to rise in California. They started the year at 20.5% in Q1, then 21.8% in Q2, and 22.3% in Q3. So this quarter’s rise was a little slower than the last, but still a new record in the state.

It means that California will likely exit the year with a BEV run rate of around 23%, which is slightly down from our expectation of around 25%+. But still significantly up from the 9% of 2021 and 17% of 2022. And pure-ICE market share has dropped in the same timeframe, to 64.6% YTD in 2023 from 71.6% in 2022.

Comparatively, the US had an EV market share of 7.9% in Q3, putting California EV sales about 3x higher than the country’s average (especially if you take California out of the national data, as the state pulls the national average up).

Accounting further for Plug-in Hybrids, more than 1/4 of California’s new car registrations had a plug in Q3. Adding conventional hybrids and fuel cell vehicles to the mix, more than 1/3 – 37.3% – are “alternative fuel vehicles.”

Hybrid and EV sales continued to rise in Q3, but plug-in hybrid sales continued to hover around 3%.

Total new EV registrations actually dropped in California in Q3 as compared to Q2, with 100,597 new EVs registered versus 103,061 in the previous quarter. But overall auto sales dropped by a larger amount, meaning EVs were a higher share of sold vehicles. This is due to the seasonality of car sales – compared to Q3 of last year, overall auto sales are up 21.1%, and BEV sales are up 56.3%.

But one interesting battle being fought in California recently is between Toyota and Tesla for top dog in the leading state for EV adoption and in the state of Tesla’s birth. Toyota has long held the position as #1 brand, and the Toyota Camry had been the best-selling vehicle in California in many years until the Model 3 (and then the Model Y) unseated it. This has earned the Model 3 the nickname “California Camry” based on how common it is on CA roads.

While Tesla had unseated Toyota for the best-selling model, Toyota still maintained position of top-selling brand, as the latter sells a much broader base of models compared to Tesla’s smaller set of model offerings. But in Q2, we noticed that Tesla had narrowly outsold Toyota for the first time, based on the incredible strength of Model 3 and Model Y sales, which were (and remain) the best-selling models in the state by a ridiculous margin.

But in Q3, Toyota came back and earned the top spot again. Toyota sold 70,314 vehicles (compared to 67,482 in Q2) and Tesla sold 60,061 (compared to 69,212 in Q2). This is in keeping with Tesla’s overall down quarter in deliveries, though sales still improved significantly compared to Q3 of last year.

As a result, Toyota is now ahead of Tesla by about 20,000 vehicles year-to-date, meaning that Tesla is unlikely to become the best-selling brand for all of 2023. But the company is still comfortably in second-place, with about a 50,000 vehicle advantage over Honda year-to-date.

And Tesla still dominates the best-selling vehicle list and nobody else even close, at 106,398 and 66,698 units each so far this year. The Toyota RAV4 and Camry are running so far back that they may as well be in a different race, at 40,622 and 39,293 units each.

Other quick insights from the report include: continued strong sales growth for Rivian, which has the largest percent increase year-to-date at 176.8%; a new breakdown of top-selling BEV and PHEV sales which shows the Wrangler 4xe to be the fourth-most-popular vehicle with a plug in the state, behind Model Y/3 and the Chevy Bolt; BEV share of 25.7% YTD in Northern California, as compared to 21.1% in Southern California (pick up the pace IE, OC and LA can’t carry everyone); and a 103% increase in sales of BEVs at franchised dealerships (namely, traditional auto companies) year-to-date, compared to just a 42% increase in BEV sales from direct sellers (namely, the EV startups).

Electrek’s Take

We like looking at this data each quarter because California tends to lead the rest of the nation on trends and adoption of new technologies, and this has always been the case in EV sales.

A couple years ago, California was down at 7% new EV sales, but the rest of the country was selling 2% or so. Now, the country is at 7%, and California is at 22%.

So if you want a sense of where the nation will be in a couple years, this is data worth looking at.

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MuskWire TLDR:

According to the California New Car Dealers’ Association’s “California Auto Outlook” report for Q3, electric vehicle (EV) sales in California continue to rise steadily, reaching a record 22.3% market share. However, Tesla has returned to its position as the second-best selling brand in the state, behind long-time leader Toyota, after briefly surpassing the brand last quarter. EV sales in California have been consistently increasing over the years, with Q3 marking a new record. The state is expected to end the year with a battery electric vehicle (BEV) run rate of around 23%, slightly lower than expectations but significantly higher than previous years. Meanwhile, the market share of traditional internal combustion engine (ICE) vehicles has dropped from 71.6% in 2022 to 64.6% year-to-date in 2023. California’s EV market share is about three times higher than the national average, which stands at 7.9% in Q3. The report also highlights that more than 25% of new car registrations in California in Q3 had a plug, including plug-in hybrids, and over a third of new registrations were classified as “alternative fuel vehicles” when accounting for conventional hybrids and fuel cell vehicles. While total new EV registrations decreased in Q3 compared to Q2, the drop in overall auto sales resulted in EVs having a higher share of sold vehicles. In terms of brand competition, Toyota has traditionally held the position as the top-selling brand in California, with the Toyota Camry as the best-selling vehicle. However, the Model 3 and Model Y from Tesla have gained popularity, leading to Tesla briefly outselling Toyota in Q2. Nevertheless, Toyota regained the top spot in Q3. Toyota is currently ahead of Tesla by about 20,000 vehicles year-to-date, making it unlikely for Tesla to become the best-selling brand for the entirety of 2023. Despite this, Tesla still dominates the best-selling vehicle list in California. The report also mentions strong sales growth for Rivian, with the largest year-to-date percent increase at 176.8%, and the Wrangler 4xe being the fourth-most-popular vehicle with a plug. Finally, the report highlights a 103% increase in sales of BEVs at franchised dealerships compared to a 42% increase from direct sellers, indicating the growing presence of traditional auto companies in the EV market. California’s EV sales trends often provide insight into the future of EV adoption in the rest of the country.